10 November 2017

Paradise Papers: how to combat tax avoidance?

Roughly eighteen months after the Panama Papers leak journalists have published another vast trove of data exposing the tricks used by celebrities, politicians and companies to avoid taxes. Commentators ask why more is not being done to combat these practices.

High time loopholes were closed

The EU must do more to promote transparency, Arnaud Zacharie and Antonio Gambini of the Belgian Centre for Development Cooperation stress in Le Soir:

“The EU has made progress on this front, but not enough: according to the first reading by the European Parliament European companies whose turnover exceeds 750 million euros must publish country-by-country reports, but exemptions are granted for 'commercially sensitive' data - a concept sufficiently vague to allow all manner of loopholes. ... What we're seeing is that tax evasion on a large scale, legal or not, is not a fate carved in stone. On the contrary, there are known solutions. At a time when budget austerity and the growing gap between rich and poor are endangering our social and democratic models, it would be irresponsible not to do all we can to put these models to use.”

Rocking the foundations of democracy

The revelations from the Paradise Papers are destroying many myths that formed the bedrock of the economic and political system, News247 comments:

“The first and most important myth is that a healthy business community creates prosperity for all and that the market must be free and doesn't need the regulating framework of the state. ... The second myth is that the parties are financed by the state. ... The Paradise Papers provide highly interesting insights into the offshore financing of the Democrats and Republicans in the US. ... The third and final myth is that politics is moral, and acts as an opponent to a complex financial system that increases inequality and facilitates legal and illegal tax avoidance by the elites.”

Rich no longer need to break the law

The truly scandalous aspect of the Paradise Papers is that the tax loopholes they reveal are perfectly legal, Kurier fumes:

“Those who are rich and want to stash money away needn't break any laws. The tax regulations have long been designed in such a way that only the ordinary people have to toe the line and share their earnings, while the rich have the legal means and the necessary capital to escape these duties. It no longer seems possible to correct these aberrations: the globally networked tax avoidance industry lives a life of its own and has become completely ungovernable. How else could it be that after every major leak the politicians whose duty it is to write the laws churn out empty clichés about the evils of tax avoidance yet they haven't taken any concrete steps against it for years? Despite the fact that they themselves passed the laws that create such tax loopholes in the first place.”

Tax havens shouldn't be demonised

Tax havens also have a positive side, 24 Chasa writes commenting on the Paradise Papers leak:

“Everyone is free to do as they please with their money as long as they pay their taxes and social contributions. Whether they put it in the bank, under their mattress or send it to the Cayman Islands, that's their own free choice. People who are subject to despotic rule in their home countries can keep their money safe by sending it to a tax haven. ... Sure, there are dictators, criminals and tax dodgers who use these havens to cover their tracks. But that doesn't mean that everyone who has an account on the Cayman Islands is a criminal. Just like not every rich person is evil.”

The elites' war on the people

Given the base tricks the rich resort to to dodge taxes it's no wonder populists are so successful with their tirades against the powerful in so many countries, The Guardian writes:

“Take first the cliche that the public in the UK, the US and elsewhere are at war with their elites. This week proves that the opposite is true - it is the elites who have been fighting trench warfare against their publics, by denying them the revenues they need for their hospitals and schools. That war is one source of this current anti-elite mood. ... We must accept that Big Finance and runaway inequality are incompatible with either a functioning democracy or a sustainable economy.”

Dangerous loss of trust

Even if offshore accounts aren't necessarily illegal they are destroying the ordinary taxpayers' trust in politics, Jutarnji list comments:

“Unless positive changes are made the established parties that make such things possible with their laws will continue to lose voters. ... Crises like that in Catalonia will become the norm, and the EU's foundation will not only wobble, it will break. The best project in the history of Europe threatens to collapse. The current generation of politicians has a duty to prevent this. It must make sure that in ten years' time another batch of data like the Panama or Paradise Papers doesn't come to light.”

Time to simplify the tax laws

Tax evasion can be fought by simplifying tax laws, writes Jean-Philippe Delsol, a tax lawyer and head of the think tank IREF, in Contrepoints:

“Of course it can be disagreeable to find out that on top of everything else the most prosperous companies also try to avoid taxes. But if they do it using legal channels, what we really should be asking is why the tax laws are so poorly formulated that they allow these practices. The problem is that the tax laws of all developed countries, and in particular France, have become a jungle. And you can hide more easily in a jungle than you can in the desert. Particularly in France, taxation has become abusive and exploitative. The remedy isn't a witch hunt, but a revision that will simplify and clarify tax laws and make tax rates more rational.”

Come clean over dirty tax practices

The Netherlands has once again come under attack as a result of the Panama Papers revelations. The country must finally take action, NRC Handelsblad demands:

“Now the Netherlands may become a target along with countries like Ireland. Because for others mobbing is the best strategy to avoid becoming targets themselves. But it can hardly be denied that the Hague has accumulated a pretty dirty record. ... The Rutte government should take the initiative on the reform of international tax practices - first of all in Europe. It must make a big gesture of good will - for instance making its tax deals with multinationals public.”

Crusade against the rich

Capitalism critics are abusing the revelations for their own envy-filled agenda, the Daily Telegraph complains:

“Most of what is being disclosed does not constitute unethical, let alone illegal, activity. Indeed, millions of people have money invested in offshore funds through their pension schemes. ... As with the Panama Papers, this story has been hijacked by anti-capitalist campaigners who object to the fact that some people are richer than others. ... What we are seeing here masquerading as a great moral crusade is an attempt to close down legitimate tax vehicles so that decisions on where people put their money can in future be taken by the state.”

Tax competition is not criminal

“In a global world offshore transactions are sometimes necessary and sometimes the result of problems, but hardly ever their cause. Demonising the quest for protection from arbitrary, excessive bureaucracy and taxes or simply privacy is therefore oversimplistic. To use a few cases of abuse to depict the international tax competition in general as criminal is reckless. We shouldn't be misled by the all too clear and, at best, naive motives of the self-appointed transparency apologists. Competition to attract companies, protection of the private sphere and yes, offshore transactions too, all continue to be necessary.”

Adopt the laws to suit our morals

The debate over tax practices must move beyond the level of moral outrage, Berlingske urges:

“The discussion over tax loopholes must be led at the legal and political level, even though naturally it is also a moral issue. Have laws been broken? Is the national and international legislation effective enough to combat tax avoidance? Moral conceptions vary depending on political leanings. ... It is not appropriate to demand that companies, organisations and individuals subject themselves to double standards as regards both the laws and morals.”

EU lagging behind

The EU has failed to give its institutions the competences they need to fight tax avoidance, Reporter complains:

“We have repeatedly reported that a committee of 30 MEPs examined the Panama Paper revelations and found nothing. Today the 14th vice-president of the European Parliament and Syriza MP Dimitris Papadimoulis sent an urgent inquiry to the EU Commission asking what it intends to do about the recent revelations. What will probably happen is that the Commission will respond that it is setting up a 30-person committee of experts that will examine the issue for five years and then admit that it's come to a dead end. What else can it do given that it lacks the necessary competences and history has taught us that the swindlers are always a decade ahead of inadequate EU regulations?”

Tax evasion is getting more difficult

There has been significant progress in the fight against tax avoidance although much still needs to be done, L'Echo counters:

“Since the financial crisis of 2008 a global movement spearheaded by the OECD has been set up to counter tax fraud. Since then the most progress has been made in the area of the exchange of information. In September 2017, 50 countries started cooperating in this area, and 50 more have promised to be ready to do so by next September. These include Austria and also Switzerland, the leading apologist of banking secrecy, as well as key offshore locations like the Bahamas. Automatic exchange of information is becoming the global standard. In 2008 that was completely unthinkable.”

A paradise just for the rich

It's scandalous that businesses are shirking their social responsibility to such an extent, the Süddeutsche Zeitung comments:

“More than just marginal phenomena, tax havens have long been the collective meeting place of the economic elite. ... For businesses that boast tax rates of 15 percent, globalisation provides paradisiacal conditions. It offers all of the advantages while allowing them to avoid the regulations. That's brazen, scandalous even. Not even the Garden of Eden offered such great conditions. ... You can't create a paradise on earth with the tax haven model. It's essence is that it's not accessible to everyone, that not everyone can afford it. In its exclusivity it sends a message to all those who are on the outside, in the fiscal here and now, with the social state, regulations and democratic procedures: hell is you.”

Outrage without consequences so far

“Once again the papers are full of famous names with tax allergies in all their naked greed. Once again the disclosures have met with popular indignation. ... Once again it's clear that a privileged group believes they are above the law. In past centuries the people would gather at the palace and demand the monarch's head. We little people of today are too civilised for that. Now the tax dodgers need to become civilised, too.”